MEXICO CITY (Reuters) -- The Mexican Senate has rejected a key
                  provision of a proposed film law that had sought to force theaters to reserve
                  10 percent of screen time for Mexican movies, local media reported on
                  Wednesday.

                  Backers had hailed the law as a way of reviving Mexico's film industry by
                  helping it compete against Hollywood.

                  The law will now likely have to wait until the new legislative session next
                  year, as legislators are currently busy debating the 1999 budget, Reforma
                  newspaper said.

                  The Mexican Chamber of Deputies approved the proposed law by 478-0
                  over the weekend and sent it to the Senate, where swift approval was also
                  expected.

                  But at the intervention of Mexican Trade Minister Herminio Blanco, who
                  claimed the 10 percent provision would violate at least three treaties with
                  foreign trade partners, the Senate stripped the bill of that requirement and
                  returned the measure to the lower house, Reforma said.

                  The problem was not the North American Free Trade Agreement (NAFTA)
                  with the United States and Canada, but trade pacts with other Latin
                  American countries that prohibited such protectionism, the paper said.

                  Since the Mexican film industry was deregulated in 1992, the number of
                  local productions has plummeted while foreign films, mostly from the United
                  States, have flooded theaters.

                  Before the 1992 law, theaters were forced to reserve half their screen time
                  for Mexican movies and ticket prices were fixed at three pesos, then about
                  $1. The government also helped finance films.

                  Under that scheme, the local industry had cranked out a large number of
                  low-quality films, legislators said, a sad development considering Mexico's
                  film history.

                  The "Golden Era" of the country's cinema in the 1940s and 1950s is still a
                  source of national pride.

                   Copyright 1998 Reuters.